The Global Chip Shortage could continue into 2023
According to Glenn O’Donnell, Vice President Research Director at Forrester, the global chip shortage we are currently experiencing could last all the way until 2023.
Chips are in everything from your PlayStation 5 to your electric toothbrush – and there’s not enough to go around. It’s an issue that shows no sign that it will slow down any time soon.
“Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023,” O’Donnell says.
O’Donnell also theorizes that demand for PCs, which contain some of the most advanced chips, will “soften a bit” in the coming year but “not a lot”.
“Couple that with the unstoppable desire to instrument everything, along with continued growth in cloud computing and cryptocurrency mining, and we see nothing but boom times ahead for chip demand,” O’Donnell continues.
Another opinion, from Patrick Armstrong, CIO of Plurimi Investment Managers, is that the chip shortage will last 18 months.
“It’s not just autos. It’s phones. It’s the internet of everything. There’s so many goods now that have many more chips than they ever did in the past. They’re all internet enabled,” says Armstrong.
More than any other industry, the auto industry has been affected the most by the chip shortage.
TSMC (Taiwan Semiconductor Manufacturing Company), the world’s largest chip manufacturer, said earlier this month that it thinks it will be able to catch up with demand by June. Armstrong thinks that is ambitious.
“If you listen to Ford, BMW, Volkswagen, they all highlighted that there’s bottlenecks in capacity and they can’t get the chips they need to manufacture the new cars,” he said.
Gartner said that they believe the chip shortage will last throughout 2021, noting that the shortage impacts all chip types. They also note that chip prices are rising.
Alan Priestly, an analyst at Gartner, says that the situation may improve for some industries in the next six months, but there could be a “knock-on effect” into 2022.
“It shouldn’t go longer,” he said. “The industry is putting more capacity in place, but it does take time.”
Intel announced in March that they plan to build two new chip factories in Arizona, as well as one in Europe if they receive public funding.
Priestly says “That stuff is going to take two or three years before we start to see that, but that’s really looking to meet future demand.”
Wenzhe Zhao, Director of Global Economies and Strategy at Credit Suisse, says that the recent chip shortage has caused inventory hoarding along chip production chains, widening the gap between expanding demand and stagnant supply.
Zhao also mentions that new semiconductor production capacity won’t come online until 2022 or later. He adds that little can be done right now to remedy present-day shortages other than production schedules and pricing.
